Managerial Finance

MICROSOFT CORPORATION

FinancialStatementFY20Q1

BALANCE SHEETS

(In millions) (Unaudited)

June 30,

June 30,

2019

2018

Assets

Current assets:

Cash and cash equivalents

$11,356,000

$11,946,000

Short-term investments

$122,463,000

$ 121,822,000

Total cash, cash equivalents, and short-term investments

$133,819,000

$ 133,768,000

Accounts receivable, net of allowance for doubtful accounts of $411 and $377

$ 29,524,000

$ 26,481,000

Inventories

$ 2,063,000

$ 2,662,000

Other current assets

$ 10,146,000

$ 6,751,000

Total current assets

$175,552,000

$ 169,662,000

Long-term assets:

Property and equipment, net of accumulated depreciation of $35,330 and $29,223

$ 36,477,000

$ 29,460,000

Operating lease right-of-use assets

$ 7,379,000

$ 6,686,000

Equity investments

$ 2,649,000

$ 1,862,000

Goodwill

$ 42,026,000

$ 35,683,000

Intangible assets, net

$ 7,750,000

$ 8,053,000

Other long-term assets

$ 14,723,000

$ 7,442,000

Deferred asset charges

$ -

$ -

Total assets

$286,556,000

$258,848,000

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$9,382,000

$8,617,000

Short-term Debt/Current portion of long-term debt

$ 5,516,000

$ 3,998,000

Accrued compensation

$ 6,830,000

$ 6,103,000

Short-term income taxes

$ 5,665,000

$ 2,121,000

Short-term unearned revenue

$ 32,676,000

$ 28,905,000

Other current liabilities

$ 9,351,000

$ 8,744,000

Total current liabilities

$ 69,420,000

$ 58,488,000

Long-term debt

$ 66,662,000

$ 72,242,000

Long-term income taxes

$ 29,612,000

$ 30,265,000

Long-term unearned revenue

$ 4,530,000

$ 3,815,000

Deferred income taxes

$ 233,000

$ 541,000

Operating lease liabilities

$ 6,188,000

$ 5,568,000

Other long-term liabilities

$ 7,581,000

$ 5,211,000

Misc. Stocks

$ -

$ -

Minority interest

$ -

$ -

Total liabilities

$184,226,000

$176,130,000

Stockholders' equity:

Common stock and paid-in capital - shares authorized 24,000; outstanding 7,643 and 7,677

$ 78,520,000

$ 71,223,000

Retained earnings

$ 24,150,000

$ 13,682,000

Accumulated other comprehensive loss/Other equity

$ (340,000)

$ (2,187,000)

Total stockholders' equity

$102,330,000

$ 82,718,000

Total liabilities and stockholders' equity

$286,556,000

$258,848,000

MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)

Twelve Months Ended June 30,

2019

2018

Sales:

Product

$66,069,000

$64,497,000

Service and other

$ 59,774,000

$ 45,863,000

Net sales

$125,843,000

$110,360,000

Cost of goods sold:

Product

$ 16,273,000

$ 15,420,000

Service and other

$ 26,637,000

$ 22,933,000

Total cost of goods sold

$ 42,910,000

$ 38,353,000

Gross profit

$ 82,933,000

$ 72,007,000

Research and development

$ 16,876,000

$ 14,726,000

Sales and marketing

$ 18,213,000

$ 17,469,000

General and administrative

$ 4,885,000

$ 4,754,000

Total operating expenses

$ 42,959,000

$ 35,058,000

less: Interest expense

$ 2,686,000

$ 2,733,000

Other income, net

$ 3,415,000

$ 4,149,000

Earnings before income and taxes

$ 43,688,000

$ 36,474,000

less: Provision for income taxes

$ 4,448,000

$ 19,903,000

Net income

$ 39,240,000

$ 16,571,000

Net income available to common shareholders

$ 39,240,000

$16,571,000

Earnings per share:

Basic

$5.11

$2.15

Diluted

$5.06

$2.13

Weighted average shares outstanding:

Basic

$ 7,673,000

$ 7,700,000

Diluted

$ 7,753,000

$ 7,794,000

MICROSOFT CORPORATION

CASH FLOWS STATEMENTS

(In millions) (Unaudited)

Twelve Months Ended June 30,

2019

Operating Activities

Net income

$39,240,000

Non-cash adjustments

Depreciation, amortization, and other

$ 11,682,000

Stock-based compensation expense

$ 4,652,000

Net recognized gains on investments and derivatives

$ (792,000)

Deferred income taxes

$ (6,463,000)

Changes in working capital

Accounts receivable

$ (2,812,000)

Inventories

$ 597,000

Other current assets

$ (1,718,000)

Other long-term assets

$ (1,834,000)

Accounts payable

$ 232,000

Unearned revenue

$ 4,462,000

Income taxes

$ 2,929,000

Other current liabilities

$ 1,419,000

Other long-term liabilities

$ 591,000

Net cash from operations

$ 52,185,000

Financing Activities

Repayments of short-term debt, maturities of 90 days or less, net

$ -

Proceeds from issuance of debt

$ -

Repayments of debt

$ (4,000,000)

Common stock issued

$ 1,142,000

Common stock repurchased

$ (19,543,000)

Common stock cash dividends paid

$ (13,811,000)

Other, net

$ (675,000)

Net cash used in financing

$ (36,887,000)

Investing Activities

Additions to property and equipment

$ (13,925,000)

Acquisition of companies, net of cash acquired, and purchases of intangible and other assets

$ (2,388,000)

Purchases of investments

$ (57,697,000)

Maturities of investments

$ 20,043,000

Sales of investments

$ 38,194,000

Securities lending payable

$ -

Net cash used in investing

$ (15,773,000)

Effect of foreign exchange rates on cash and cash equivalents

$ (115,000)

Net change in cash and cash equivalents

$ (590,000)

Cash and cash equivalents, beginning of period

$ 11,946,000

Cash and cash equivalents, end of period

$11,356,000